Procurement Processes and Tools

Methods of Procurement

There are different methods of procurement, which are utilized to

acquire goods or services. There are many factors which

determine which method is best, but the most important of these

would be: the complexity of your need, the value of the

procurement, your time horizon, the availability of potential

suppliers, the interest of potential suppliers in competing for this

procurement, and the risk if something goes wrong during the

process. All these factors will influence the procurement strategy

and the selection of the best method of procurement in a given

situation.

The procurement process can range from simply deciding to

directly award (sole source) a contract to a multi-stage process that

involves information gathering, pre-qualification and solicitation

activities.

Purchasing Activities

A Request for Tenders (RFT) is a priced based bidding process

that is used when the solution(s), specification(s), performance

standard(s), and timeframe(s) are known. Potential bidders are

provided with all project information - except price – and the

evaluation of the bids is based only on price. A RFT is rarely a

multi-step process.

A Request for Proposals (RFP) is a project-based process

involving solution, qualifications, and price as the main criteria

that define a winning proponent. The RFP is used mainly to

acquire services when purchaser wants to review and implement

different and new solutions to a problem, project, or business

process. An RFP can range from a single-step process for

straightforward procurements to a multi-stage process for complex

and significant procurements.

Proposals versus Tenders

A proposal is different from a tender. Unlike a tender, an RFP is

not an offer, but only contemplates an offer. Unlike the receipt of a

tender, the receipt of a proposal is not an acceptance, and therefore

does not result in a contract. For example, a marriage proposal

does not always result in an agreement of marriage.

An RFP is used when the purchaser is looking for the best

value solution to resolve a problem or to deliver a good or

service, but is not exactly sure how to achieve it.

A tender is used when the purchaser knows exactly what

good or service they want and is looking for the best price

to deliver it.

The difference between a tender and a proposal is well explained

in a recent NWT court judgement:

“When the Government knows what it wants and how it should be

done (such as a construction project), it will already have its

plans and specifications and is looking simply for the best price.

On the other hand, when the Government knows what it wants

done, but not how to go about doing it, it seeks proposals on

methods, ability, and price. Then it can negotiate on the best

method to achieve the best value.” (1) Socanav Inc and the

GNWT et al., SCNT, Vertes, Aug 5, 1993

When to Use a Proposal or a Tender

To determine whether to use an RFP or a tender, consider the

following:

Tender - Know What and How

Use a tender if you know what you want done and how it should

be done:

if the good or service is clearly defined; or

if there is a detailed methodology, procedure, or material

and performance specification

Proposals - Know What, but Not How

Use an RFP if you know what you want done, but you do not

know how it should be done, that is:

if the good or service is not clearly defined; or

if there is no detailed material or performance

specification; or

if you are looking for a general solution to a problem; or

if the proponent’s solutions are expected to be quite varied

and/or difficult to evaluate.

Information Gathering Activities

Information gathering activities are processes used to obtain

information on the availability of goods or services, the availability

of potential suppliers, and the level of interest in the procurement.

These activities are not competitive processes as they are not

requesting quotes or proposals

Request for Expressions of Interest

A Request for Expressions of Interest (REOI) process is used when

you may have a requirement for a sophisticated, multi-skilled team

or specialized knowledge and very few companies seem to possess

the necessary skills or experience. This methodology is sometimes

used to find other contractors with the “right stuff” and get them

interested in the project.

This process is not generally used to disqualify potential

contractors, nor to create a short list for an invitational RFP.

Content – What to Include

The Expression of Interest document should:

clearly define the opportunity and the project;

provide a solid plan with time lines;

clearly state your priorities;

include a general outline of the evaluation criteria for the

subsequent RFP selection, or for any intervening stages;

address potential questions and invite those who are interested

to respond.

Instructions to the potential respondents may also include

submission length and required content, such as:

team/corporate partners;

key personnel;

financial and surety information (if applicable);

project experience, and

approach to the project.

Request for Information

Pre-qualification Activities

Request for Qualifications

A Request for Qualifications is a process that will enable you to

pre-qualify proponents for a particular requirement and avoid

having to struggle with a large number of lengthy proposals.

This process is useful when you anticipate a great deal of interest,

and need to screen many contractors so you can move quickly to a

short list of qualified proponents for a full RFP process.

It also limits the number of potential bidders who will be required

to go to the expense of preparing a detailed proposal.

What to Include:

A Request for Qualifications document should:

describe the project;

provide a project plan with time lines;

clearly present your priorities;

suggest a submission length, and

ask for the same basic contractor information as an Expression

of Interest.

This process also needs to:

identify the minimum requirements or pass/fail tests that each

contractor must satisfy in order to be invited to participate in

the RFP;

set out the criteria that would otherwise appear as “mandatory”

in the RFP.

Benefits

There are several benefits in using this process:

unqualified or inexperienced contractors are removed from

the selection process;

it is less costly to the proponents;

you will likely receive better proposals from proponents

who feel they have a good chance of winning;

fewer proposals will reduce the evaluation burden.

Important Note

Often Request for Expressions of Interest and Requests for

Qualification are combined under the “Expressions” banner to pre-

qualify potential or interested suppliers. However, departments are

encouraged to use the RFQ for the pre-qualification process as it

more clearly communicates to potential bidders and proponents

that the process is looking for qualifications not just expressions of

interest.